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Baroness Buscombe: I thank the Minister for her full response to the amendment. This has been a helpful debate. I shall encourage my noble friend Lord Astor to read the Minister's remarks in Hansard. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 195 agreed to.

Baroness Buscombe moved Amendment No. 150:

After Clause 195, insert the following new clause—

"DUTY OF COMPTROLLER TO FULFIL REVIEW AND REPORTING OBLIGATIONS
(1) It shall be the duty of the Comptroller—
(a) as soon as is practicable after the period of twelve months beginning with the commencement of this section; and
(b) as soon as practicable after the end of each subsequent period as may be selected by the Comptroller for the purposes of this section,
to fulfil the review and reporting obligations.
(2) The period selected by the Comptroller for the purposes of subsection (1)(b) must be a period of not more than three years beginning with the end of the previous period for which the Comptroller has satisfied those reviews and reporting obligations.
(3) The review and reporting obligations for a period are—
(a) an obligation to carry out an examination into the efficiency, economy and effectiveness of the BBC's services;
(b) an obligation to prepare and publish a report on the matters found on the review.
(4) Subsection (3) shall not be construed as entitling the Comptroller to question the merits of the policy objectives of the BBC's services.

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(5) In this section—
"BBC's services" means the television and radio broadcast services provided by the BBC;
"the Comptroller" means the Comptroller and Auditor General as identified in section 3(1)(a) of the National Audit Act 1983 (c. 44)."

The noble Baroness said: Amendments Nos. 150 and 151 address the need to enable the Comptroller and Auditor General to have full value-for-money access rights to the BBC, and thus to open it up to the same scrutiny on Parliament's behalf as all other bodies that are funded by tax. There is total consensus among members of the Commons Public Accounts Committee on this issue.

I think it important to say straight away that this scrutiny would not impinge in any way on the editorial independence of the BBC, but that it would give some measure of accountability and transparency. We believe that that would be in the best interests of the BBC.

A number of noble Lords spoke at some length about this matter at Second Reading. I should like to inform the Committee of some progress that has been made since that debate. Perhaps I may quote the remarks of the chairman of the BBC, Mr Gavyn Davies, on 6th May to the BBC All Party Parliamentary Group:

"In addition, in terms of talking about scrutiny, I know that many of you would like such improvements to involve the National Audit Office. The Governors are not opposed to this in principle, but are emphatically opposed both in practice and in principle to any NAO involvement which would undermine the authority of the Audit Committee or threaten the basic independence of the BBC from the political process. I am hoping that a way can be found of squaring this particular circle before the matter arises once again in the House of Lords in coming days or weeks. If so, then I will enthusiastically support a sensible way forward which protects our genuine concerns about independence, but also offers Parliament better reassurance about our use of public money".

We believe that that is a very helpful statement. In a sense it complements concerns; it responds to a letter written by the Public Accounts Committee to me and to others who have been involved in this debate.

The chairman of the Public Accounts Committee, my honourable friend Edward Leigh, MP, wrote with regard to National Audit Office scrutiny of the BBC:

"I can give firm assurances that what is proposed would present no risk to the BBC's editorial freedom, its independence and integrity. Nor would it in any way duplicate or undermine the role undertaken by the BBC Governors, internal auditors or external auditors".

That is an important point. There is no wish on our part in any way to supplant the role of the BBC governors.

With regard to scrutiny by the National Audit Office and the Public Accounts Committee, the chairman of the Public Accounts Committee went on to say that scrutiny would not challenge the BBC's editorial integrity. He said:

"It has sometimes been suggested that the National Audit Office might interfere with the BBC's editorial independence or somehow risk damage to the quality of its programming. I fully understand the concern but I cannot conceive of any circumstance in which the Comptroller and Auditor General would seek to

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second-guess the BBC's decisions as to the programmes they make or their editorial content. The Comptroller and Auditor General is concerned only with sound financial management and achievement of value for money. I feel confident that he would not look at what programmes the BBC chooses to make, but at how it goes about doing it. In fact, the Comptroller and Auditor General is prevented by statute from commenting on the merits of policy objectives. Any suggestion that the Committee of Public Accounts would behave differently and attempt to interfere with the BBC's programming policy fundamentally misunderstands the way in which the committee works. The committee never gets involved in policy decisions".

My honourable friend went on to say:

"As for the BBC's independence, it is worth noting that the National Audit Office already has a role on some of the BBC's activities, including the collection of the licence fee. It is also able to scrutinise the BBC World Service and there has never been any suggestion that this has in any way compromised the service's independence. There are other bodies whose independence is important which are subject to NAO audit, such as the research councils or the British Council, and again there has never been any suggestion that this in any way compromises their essential freedoms. The NAO also audits a number of bodies with creative purpose, such as the Film Council. Again, this has not compromised their activities in any way . . . The Committee of Public Accounts encourages well-managed risk-taking and innovation. It has sometimes been said that fear of scrutiny might discourage entrepreneurial risk-taking and innovation. In fact, the Committee of Public Accounts has made many recommendations over the years in support of risk-taking, as long as risks are well thought out. But where there is waste or mishandling of public money, it is right for Parliament to hold those responsible to account. Ninety per cent of the recommendations made by the Committee of Public Accounts are accepted, surely also demonstrating that our work, supported by the staff of the National Audit Office, consistently adds value".

My honourable friend went on to say:

"The role being sought for the Comptroller and Auditor General is quite separate from the role that will continue to be exercised by the BBC governors and its existing internal and external auditors. The role proposed for the Comptroller and Auditor General is that he should be able to carry out value for money examinations on behalf of Parliament into the economy, efficiency and effectiveness with which the BBC has spent public money. In proposing that the Comptroller and Auditor General should be able to inspect the BBC's financial affairs in this way, I am not suggesting that he should audit the BBC's annual account. That work is already done by private sector auditors",

and my honourable friend sees no reason for those arrangements to change. He continued:

"A concern has been raised that the right to appoint auditors will be taken away from the BBC governors. It would not. Those arrangements and the specific responsibilities of the BBC's audit committee to oversee the audit process would continue intact. The National Audit Office's work on other bodies suggests a wide range of issues that would surely also be relevant to an organisation as large and diverse as the BBC. Those include matters such as good financial management, construction project management, implementation of information technology projects, routine procurement and best practice and performance measurement. None of those areas would impact on the BBC's editorial decisions but if money could be saved, surely that could only help to improve the quality of the BBC's programming output".

My honourable friend concluded by saying:

"I can understand if the BBC may be looking for further reassurance, particularly that National Audit Office access would not threaten its editorial independence. A good precedent in how this might actually be achieved has been established in the way the noble Lord, Lord Sharman's recommendations to extend the Comptroller and Auditor General's remit in other areas has been handled. Officials at the Treasury and the National Audit Office

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prepared a practicalities paper setting out the detailed arrangements. In this instance, I can envisage a similar process involving the Department for Culture, Media and Sport and the BBC. I understand that the National Audit Office will be very willing to make its input into such discussions in order to reassure the BBC on matters that understandably concern the corporation. But the point of principle that needs to be established first is the clear and unambiguous statutory right of access".

I want to say little more than that because there is a genuine commitment on the part of the BBC—as was so clearly articulated by Mr Gavyn Davies—Her Majesty's Opposition, the Public Accounts Committee and the National Audit Office to try to seek consensus with regard to this issue between now and Report. I very much hope that we can achieve a consensus, which would benefit us all. Apart from anything else, it is important that it would maintain proper independence between the BBC and the Department for Culture, Media and Sport. I beg to move.

12.45 p.m.

Lord Lipsey: I rise to speak to the amendments standing in my name and that of the noble Baroness. Although this risks defying the long-established customs of the House, I shall not repeat the argument that I made at Second Reading for NAO scrutiny. I refrain from doing so partly because I perhaps showed a certain passion on that occasion. At this stage, the sooner that the heat is taken out of this issue and the cold light of reason applied, the better off we shall all be.

I want to make two points on the broad argument about issues that have been raised since Second Reading. The first involves the excellent article in the Guardian by my great friend, Will Wyatt, the former director-general of BBC television. He argued that the licence fee was not public money and therefore was no business of the NAO. That is a good try. The licence fee is voted by Parliament; it is a compulsory levy on everyone who has a television. If one does not pay up—this emerged in our debate the other day—one can even end up in gaol. I defer to many in this House in my knowledge of ornithology but if something swims like a duck, flaps its wings like a duck and quacks like a duck, so far as I am concerned it is a duck. To say that that is not public money is ingenious but not plausible.

The second argument that has been raised—this is even more important and involves a genuine concern—relates to the belief that if the BBC were subject to such scrutiny, because the BBC falls under the Department for Culture, Media and Sport and because the accounting officer for that department, as at all departments, is the Permanent Secretary, the Permanent Secretary would somehow or other get involved in the process. I see that the noble Baroness, Lady Hogg, nods in agreement. I make it absolutely clear that if there were any danger of that, I should be as strong an opponent of that way forward as she has been.

That interpretation of what would happen cannot be sustained when one sees how the PAC proceeds. Concrete examples may be more helpful than

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abstractions. On 30th April, Mr Phil Wheatley, the director-general of Her Majesty's Prison Service, appeared before the PAC. He was not accompanied by any Permanent Secretary; he is the accounting officer and he was accountable for what he said, not the Permanent Secretary at the Home Office. On 14th May, Dr John Bell, the chief executive for the Food Standards Authority, appeared. Again, there was no Permanent Secretary—he was responsible; he was the accounting officer. I am afraid that it is a misunderstanding—I well understand how it came about—to think that reporting to the PAC would involve the Permanent Secretary as the accounting officer. I am sure that any reassurances that anyone required on that subject would be freely given by the PAC and the Comptroller and Auditor General. But that just is not so. It is for the BBC to say who would appear. I imagine that the director-general would appear and that he would be accompanied by John Smith, the head of the BBC's finances and a jolly good accountant. There is no question of any involvement by the Permanent Secretary.

That brings me—

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